Commodities Trading के ज़बरदस्त Fundamental Analysis | Abhishek Kar

Summary

This video educates viewers on key factors influencing commodity trading, such as US employment data, crude oil inventory reports, and global macroeconomic indicators. It introduces trading tools like futures and options, highlighting the potential for quick profits in a volatile market. The presenter recommends the DHAN app for easy commodity trading, emphasizing its user-friendly interface and features like cash-settlement and margin trading. The video also touches on the impact of currency values on commodity prices, using gold as an example, and identifies natural gas as the most volatile commodity, inviting traders to explore its opportunities.

Takeaways

• 📈 Pay attention to US employment data, as it can significantly influence the commodity market, especially gold prices.
• 📉 An increase in unemployment can lead to a fall in the foreign market and an increase in gold demand as a safe-haven asset.
• 📊 The inventory of crude oil, released every Wednesday at 8 PM, is a key factor in the fluctuation of oil prices.
• 💼 Futures and options are tools that can be used to capitalize on sudden market movements in commodities.
• 📌 Understanding the movement of options is crucial as it applies across all asset classes, including commodities.
• 🏆 Commodities are categorized into three major indexes: bullion, metal, and energy, offering diverse trading opportunities.
• 📱 For trading commodities, the DHAN APP provides a user-friendly interface and access to options data.
• 💰 Unlike equities, many commodities are cash-settled, requiring less upfront capital and offering trading until 11:30 PM.
• 📉 The stock market downturn can be an opportunity in commodities, as seen in the case of crude oil prices rising during such events.
• 🌐 Global macro-data, including Fed Rate actions and PMI data, have a substantial impact on the commodity market.
• 🔢 Industrial metals are heavily influenced by Chinese demand, which accounts for 50% of the consumption.
• 🌐 Currencies also affect commodity prices; for example, a stronger currency can increase the demand for gold as investors seek safety when the USD falls.

Q & A

What is the significance of US employment data in the commodity market?

US employment data, released every Friday, is crucial as it indicates how the commodity market will react. An increase in unemployment can cause the foreign market to fall and lead to an inverse effect, prompting people to invest in gold, thus increasing its demand and prices.

How does the release of crude oil inventory data impact crude oil prices?

The inventory data of crude oil, typically released around 8 PM every Wednesday, significantly influences crude oil prices as it often leads to price shifts during that time, providing traders with opportunities for profit from sudden market moves.

What financial instruments can be used to capitalize on market movements in commodities?

Futures and options are financial instruments that can be used to capitalize on market movements in commodities. Options allow traders to buy calls if they believe the price will rise or puts if they think it will fall, enabling profits in a short time frame.

What are the three major commodity market indexes mentioned in the script?

The three major commodity market indexes mentioned are bullion, metal, and energy, which are asset classes that traders can trade upon.

How does the DHAN APP facilitate commodity trading?

The DHAN APP offers a user-friendly interface for trading a wide range of commodities, including options and futures. It also provides option data for commodities and allows traders to use leverage and pledge equities to trade commodities.

What is the difference between commodity trading and equity trading in terms of settlement?

Unlike equities, where physical delivery is often required on expiry, many commodities are cash-settled. This means traders do not need to take physical possession of the commodity, simplifying the trading process.

What is the advantage of trading commodities in terms of upfront market payment compared to equities?

Commodity trading requires a lower upfront market payment compared to equities, with traders able to get commodities on a margin of 3-4%, making it more accessible for those with limited capital.

How does the trading hours for commodities differ from those for equities?

Commodity trading can continue until 11:30 PM, which is later than the typical trading hours for equities, providing more opportunities for traders to participate in the market.

What macroeconomic factors can influence the commodity market according to the script?

Macroeconomic factors such as the Federal Reserve's interest rate decisions, PMI data, and actions of central banks can significantly impact the commodity market. Traders who pay attention to these factors can potentially make profitable trades.

How does the demand from China affect industrial metals in the commodity market?

China's demand greatly influences the prices of industrial metals because it consumes about 50% of the global supply, making it a key driver of the market for these commodities.

What role do currencies play in affecting commodity prices?

Currencies affect commodity prices as changes in the value of a currency can impact the demand for commodities. For example, when the US dollar falls, investors may shift their money to gold, increasing its value due to its status as a safe-haven asset.

Which commodity is considered the most volatile according to the script?

Natural gas is identified as the most volatile commodity in the script, making it an asset of choice for traders who are accustomed to dealing with high levels of market volatility.

Outlines

00:00

📈 Commodity Trading Factors and Market Dynamics

This paragraph introduces the importance of macroeconomic factors in commodity trading, such as US employment data which influences market behavior, particularly gold prices. It explains how an increase in unemployment can lead to a rise in gold demand and prices. The paragraph also touches on the impact of crude oil inventory data released on Wednesdays at 8 PM, suggesting that traders can profit from sudden price movements using futures and options. The speaker encourages viewers to subscribe to the channel for more insights and mentions three major commodity indexes: bullion, metal, and energy. The paragraph concludes with a promotion of the DHAN APP for easy commodity trading and the benefits of trading commodities, such as cash settlement and lower upfront costs compared to equities.

05:01

🌐 Global Influences on Commodity Prices

The second paragraph delves into how macro-data can be leveraged for profitable commodity trading. It uses the example of ware-like situations where crude oil prices typically rise while the stock market falls, highlighting the potential for profit. The paragraph discusses the significant influence of Chinese demand on industrial metals and how US inventory actions affect crude oil prices. It also covers the impact of currency values on commodities, particularly gold, as investors often turn to gold when the USD weakens. The speaker invites viewers to request a video on the role of currency in commodity pricing and identifies natural gas as the most volatile commodity, suitable for traders who thrive on volatility. The paragraph ends with an encouragement to like and subscribe for more educational content on trading and investing.

Keywords

💡Commodities

Commodities refer to basic goods that are interchangeable with other goods of the same type and are typically used as primary inputs in the production of other goods or services. In the context of the video, commodities are the focus of trading and investment, with the video discussing various factors that affect their market prices and how to trade them effectively.

💡Employment Data

Employment data is statistical information that reflects the number of people employed within an economy, often released periodically and used as an indicator of economic health. In the video, it is mentioned that US employment data, particularly when it shows an increase in unemployment, can inversely affect the commodity market, leading to a rise in gold prices as investors seek a safe haven.

💡Macro Factors

Macro factors are economic events or trends that affect the overall economy and can influence financial markets. The video script illustrates how macro factors, such as employment data and central bank actions, directly impact the commodity market, showing the interconnectedness of global economic indicators and commodity prices.

💡Crude Oil Inventory

Crude oil inventory refers to the amount of crude oil stored in reserves, which is reported periodically and can influence oil prices. The video mentions that the release of crude oil inventory data around 8 PM every Wednesday often leads to significant price shifts in the crude oil market, offering trading opportunities.

💡Futures and Options

Futures and options are financial derivatives used for trading commodities and other assets. Futures are contracts to buy or sell an asset at a predetermined price at a future date, while options give the holder the right, but not the obligation, to buy or sell an asset. The video explains how these instruments can be used to profit from market movements in commodities.

💡Call and Put Options

Call and put options are types of options contracts. A call option gives the holder the right to buy an asset at a set price, while a put option gives the right to sell. In the video, it is suggested that if one expects the price of crude oil to rise, they should buy a call option, and if they expect it to fall, they should buy a put option to capitalize on these predictions.

💡Major Indexes

Major indexes in the context of commodities refer to broad market indicators that track the performance of different sectors within the commodity market, such as bullion, metal, and energy. The video mentions these indexes as tradable entities, providing investors with a way to gain exposure to the overall performance of these sectors.

💡Volatility

Volatility is a measure of the degree of variation of a trading price series over time. It is used by investors to quantify the risk of price changes in the market. The video identifies commodities as a class of assets that offer opportunities for profit in volatile market conditions, particularly for those who thrive on such unpredictability.

💡DHAN APP

The DHAN APP is mentioned in the video as a platform for trading commodities, offering an easy-to-understand user interface and access to a wide range of commodities, including options and futures. It is highlighted for its features that allow trading with leverage and the ability to pledge equities for margin in commodity trading.

💡Cash-Settled Commodities

Cash-settled commodities are contracts that are settled in cash rather than through the physical delivery of the commodity. The video points out that many commodity contracts are cash-settled, reducing the upfront market cost compared to equities and allowing for more flexible trading options.

💡Natural Gas

Natural gas is a commodity that is highlighted in the video as being the most volatile among commodities. It is presented as an asset class suitable for traders who are accustomed to and seek out high volatility for potential profit opportunities.

💡Currencies

Currencies, or more specifically, currency movements, are mentioned in the video as having an impact on commodity prices. The script explains that an increase in the value of a currency other than the USD can affect demand for commodities, with gold being a prime example, as investors may shift to gold when the USD weakens.

Highlights

Importance of watching the entire video for serious commodity traders.

Influence of US employment data on commodity market behavior, released every Friday.

Inverse effect of increased unemployment on foreign markets and gold investment.

Use of futures and options for profiting from sudden market moves in commodities.

Understanding the movement of options across asset classes for trading strategies.

Subscription and engagement invitation for the channel and video.

Existence of three major commodity indexes: bullion, metal, and energy.

Opportunities for trading commodities with high volatility.

Introduction of the DHAN APP for commodity trading with an easy-to-understand UI.

Cash-settled commodities versus physical delivery in equities.

Lower upfront market payment and margin trading in commodities.

Extended trading hours for commodities until 11:30 PM.

Use of leverage and pledging equities for commodity trading in the DHAN APP.

Impact of macro-data such as Fed Rate and PMI on the commodity market.

Example of how ware-like situations affect crude oil prices and stock markets.

Chinese demand's influence on industrial metal prices.

Impact of US inventory actions on crude oil prices.

Currency values' effect on commodity prices and investor behavior.

Natural gas as the most volatile commodity for traders accustomed to volatility.

Call to action for viewers to like, subscribe, and continue learning and trading.

Transcripts

Today we'll learn about the factors to pay attention to while trading commodities.

Make sure to watch this video till the end if you're really serious about commodities.

So, let's start today's video while having some classic Indian sweets.

The first thing to pay attention to is the employment data in the US.

It comes every Friday and tells us how the commodity market will act.

If this data shows an increase in unemployment, the foreign market falls,

this creates an inverse effect and people try to invest in gold during such times.

As a result, the demand for gold increases, resulting in an increase in its prices.

Are you seeing the effect of a macro factor on this data?

Similarly, payroll or employment data causes a huge effect on the market.

Similarly, the inventory of crude oil that comes around 8 PM every Wednesday night,

this is the reason why crude oil prices mostly shift around this time.

Don't you think that you'll profit from a sudden move?

The commodity market gives you exactly this opportunity.

This can be done with the help of futures and options.

The movement of options is the same across all the asset classes,

so, if you think crude will go up, buy call, and if you think it'll go down, buy put.

You can earn money here in a very small time frame.

Another way to earn money is to subscribe to this incredible channel and like this video.

One more interesting fact is that just like the share market,

commodities also have 3 major indexes.

These are bullion, metal, and energy that you can trade upon.

For the lovers of volatility, we have an asset class for you to take advantage of,

but before dropping the name, you need to have a commodity-based account to trade them

and for that, you can use the DHAN APP, the link to which will be dropped in the description.

Dhan offers a very easy-to-understand UI for you to trade any commodity from A to Z.

Doesn't matter if it's options or futures.

The best thing is that you can get the option data to the commodities as well.

So, make sure to check out the link to DHAN from the description.

Coming back to the point, unlike equities, where you have to take physical deliveries

on almost every expiry, no matter the stock,

there are a lot of commodities that are actually cash-settled.

Not just this, you have to pay a less upfront market than equities here.

So, to those who are tired of the new regulations on equities,

you can get the commodities on a margin of 3-4%.

What's even better is that you can trade on commodities till 11:30 PM.

And Dhan provides you with the advantage of using your remaining leverage on commodities.

You can also pledge your equities and trade commodities with the gotten margin in Dhan.

Isn't this interesting?

Like how I told you at the beginning about the effect of Global data on the commodity market,

the action of the Fed Rate, PMI data of any commodity, and the actions of the central bank

impact the commodity market too.

So, if a person pays attention to these macro-data, he can make good money.

I'll give you a very simple yet recent example.

In a ware-like situation, crude prices always go up while the stock market goes down.

Imagine how much money you could make if you knew

that you had to invest in crude oil during such times.

Another fact is that all the industrial metal is affected by the Chinese demand

because China consumes 50% of it.

Similarly, opaque or US inventory actions impact crude too.

Finally, currencies affect commodity prices too.

By the way, comment CURRENCY if you want me to make a video on that as well.

Whenever the weight of some other currency than USD increases, it impacts the commodities too.

I'll explain how.

Whenever the value of a currency increases, it affects the demand of a commodity

and this is the reason why the value of gold also increases.

The reason is big investors shift their money to gold for safer use when the USD falls down.

You saw how these factors impact the commodities

but that's not it. We still have a lot of points left with respect to commodities.

Not to keep you in suspense, so, the most volatile commodity of all is NATURAL GAS.

Those who are accustomed to volatility can use this commodity.

If you learned something from this video today, don't forget to like it.

Also, subscribe to the channel if you enjoyed the efforts,

I'll see you again in the next video.

Till then, keep learning, keep growing, keep investing, and keep trading.